Tags:
Journalism of Courage
The archetypal multinational is supposed to move in and take over. It inexorably changes food habits, cropping patterns, economic policy, political systems and, eventually, national aspirations. But the humbling of Coca Cola on the western front, the latest in a series of debacles in the food and beverages industry, shows that this seventies-vintage model needs a rider. MNCs are indeed global giants with a small handful of people at the apex determining the fortunes of an ever-widening base that crosses national boundaries and straddles entire continents. But they are also globally vulnerable.
The Coca Cola crisis began in Belgium, where about 100 people took ill after consuming the company8217;s products. The Belgian health authorities ordered the offending products to be pulled from supermarket shelves and in a swift domino effect, France and Luxembourg also imposed bans as a carbon dioxide plant in Dunkirk was identified as the source of the contamination.
Probably, the corporate sector believes that because the rest of the Chomsky model holds true. The last two year have seen international mergers and acquisitions that involve mind-boggling figures and gigantic markets. Activity has been particularly high in the information sector, both in the sunrise industries of the future and more traditional segments. The insane growth in Internet stock on the NASDAQ has been largely fuelled by major acquisitions. Meanwhile, sackfuls of telecommunications stock changed hands. Even the oldest information industry, book publishing, has been infected.
Bertelsmann AG started the run last year with its buyout of Random House, which owns some of the most prestigious imprints in USpublishing, including Knopf. Big presses began to swallow smaller operations across Europe and the US. Bookstore chains eyed presses. This month, Rupert Murdoch8217;s HarperCollins, the biggest publisher in the US after Random House, went on a buying binge that isn8217;t over yet. It has already acquired Hearst Corp8217;s Avon Books and William Morrow. In the UK, it is planning a merger with Pearson PLC8217;s Penguin/Putnam, or with the W.H. Smith Group, which in turn owns part of Hodder Headline.
The pyramid is getting ever-narrower at the top and, paradoxically, wider at the base. For the publishing industry the implications are that fewer people will get to decide what the world reads, and that the brands 8212; writers or imprints 8212; they choose to promote will leave the market with little choice. The publisher will be all-powerful, across all borders.
But here8217;s the downside: When Murdoch cancelled former Hong Kong governor Chris Patten8217;s book contract with HarperCollins because it might threaten his access to theChinese satellite TV market, the publishing house suffered a global image problem. But that was the books market, always slow to react, so the results were not too dramatic.
Food is an issue nearer where we live. In the early nineties, Perrier lost an estimated 200 million when carcinogenic benzene was found in its mineral water. The BSE issue knocked the bejesus out of the British beef industry. More recently, the dioxin scare has seen European animal products pulled from the shelves as far away as Singapore.
Most interesting was the genetically-modified foods issue. It started when the UK required GM imports from the US to be clearly labelled, so that concerned consumers could avoid them. The US pointed out that all-American types ate them, so what was the fuss about? Now, six months after the issue went global, President Clinton has found himself agreeing at the Cologne summit that GM foods number among the three greatest threats to humanity in the millennium. Monsanto could face a degree ofdifficulty in the near future.
Chomsky divined only half the truth. Gigantic transnationals that swallow lesser players whole are indeed the order of the day. But they are vulnerable on a global scale. A problem with a small plant in remote Dunkirk can shut an transnational down across a continent and damage its image around the world 8212; even the best-branded transnational in the world.
